Johnson & Johnson to settle talc cancer claims for $8.9 bn

Johnson & Johnson said on Tuesday that it had agreed to pay $8.9 billion to tens of thousands of people who claimed the company’s talcum powder products caused cancer, a proposal that lawyers for the plaintiffs called a “significant victory” in a legal fight that has lasted more than a decade.

The proposed settlement would be paid out over 25 years through a subsidiary, Johnson and Johnson said in a securities filing. If a bankruptcy court approves it, the agreement will resolve all current and future claims involving Johnson & Johnson products that contain talc, such as baby powder, the company said.

In a statement, a group of lawyers who represent nearly 70,000 plaintiffs described the deal as a “landmark” and a “significant victory for the tens of thousands of women suffering from gynecological cancers caused by J&J’s talc-based products.”

In addition to the deal, the court would have to accept a new bankruptcy filing by a Johnson & Johnson subsidiary, LTL Management. Johnson & Johnson created LTL in a maneuver to shield itself from the talc litigation, but an earlier bankruptcy filing by the unit was challenged by the plaintiffs and dismissed this year by a U.S. appeals court.

LTL’s first bankruptcy filing had set aside $2 billion for payouts to plaintiffs, many of whom claimed that the talc used in Johnson & Johnson’s baby powder was contaminated with asbestos and caused illnesses such as ovarian cancer and mesothelioma. With the new filing, Johnson & Johnson said it would set aside an additional $6.9 billion to cover the payouts.

The company said the settlement plan was not an admission of wrongdoing. Erik Haas, the company’s worldwide vice president of litigation, said in a statement on Tuesday that the plaintiffs’ claims “are specious and lack scientific merit” but would have taken decades and been extremely costly to resolve.

“Resolving this matter through the proposed reorganization plan is both more equitable and more efficient, allows claimants to be compensated in a timely manner and enables the company to remain focused on our commitment to profoundly and positively impact health for humanity,” Haas said.

Johnson & Johnson executives knew for decades about the risk of asbestos exposure linked to its talc products, including it famous baby powder. After years of pushing back on researchers and scientists, the company began facing a flood of lawsuits in recent years, along with government investigations and lawmaker inquiries.

The cases resulted in a mixed bag of verdicts and mistrials. Johnson & Johnson said it had prevailed in the vast majority of jury trials related to cosmetic talc; it also faced spectacular losses in which it was ordered to pay billions of dollars to a small number of plaintiffs.

In 2020, the company said it would discontinue sales of its talc-based baby powder in the United States. It plans to stop selling the product globally this year, offering a cornstarch version instead.

It also plans to break off its consumer health business, which includes brands such as baby powder, Neutrogena and Tylenol, into a stand-alone company, Kenvue. (Johnson & Johnson’s pharmaceutical and medical divisions will stay put.)

Johnson & Johnson created LTL in 2021 as part of a corporate pirouette that involves splintering off liability in a new unit and using the bankruptcy system as a shield against legal exposure. The plaintiffs had fiercely opposed that effort, known as “the Texas Two-Step” because of its origins in the state’s bankruptcy law, and prevailed in blocking it.

Tuesday’s settlement plan, however, will “provide expeditious, substantial and fair compensation to claimants who cannot afford to wait any longer for a resolution,” the plaintiffs’ lawyers said.